Colorado State University Researcher Has Provided New Study Findings on Risk Management (Analyzing the Influence of Risk Models and Investor Risk-Aversion Disparity on Portfolio Selection in Community Solar Projects: A Comparative Case Study): Insurance – Risk Management

2024 MAY 21 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Fresh data on risk management are presented in a new report. According to news reporting from Fort Collins, Colorado, by NewsRx journalists, research stated, “This study examines the impact of risk models and investors’ risk aversion on the selection of community solar portfolios.”

The news correspondents obtained a quote from the research from Colorado State University: “Various risk models to account for the volatility in the electrical power output of community solar, namely variance (Var), SemiVariance (SemiVar), mean absolute deviation (MAD), and conditional value at risk (CVaR), were considered. A statistical model based on modern portfolio theory was employed to simulate investors’ risk aversion in the context of community solar portfolio selection. The results of this study showed that the choice of risk model that aligns with investors’ risk-aversion level plays a key role in realizing more return and safeguarding against volatility in power generation. In particular, the findings of this research revealed that the CVaR model provides higher returns at the cost of greater volatility in power generation compared to other risk models.”

According to the news reporters, the research concluded: “In contrast, the MAD model offered a better tradeoff between risk and return, which can appeal more to risk-averse investors. Based on the simulation results, a new approach was proposed for optimizing the portfolio selection process for investors with divergent risk-aversion levels by averaging the utility functions of investors and identifying the most probable outcome.”

For more information on this research see: Analyzing the Influence of Risk Models and Investor Risk-Aversion Disparity on Portfolio Selection in Community Solar Projects: A Comparative Case Study. Risks, 2024,12(5). (Risks - http://www.mdpi.com/journal/risks). The publisher for Risks is MDPI AG.

A free version of this journal article is available at https://doi.org/10.3390/risks12050075.

Our news editors report that more information may be obtained by contacting Mahmoud Shakouri, Department of Construction Management, Colorado State University, Fort Collins, CO 80523, United States. Additional authors for this research include Chukwuma Nnaji, Saeed Banihashemi, Khoung Le Nguyen.

ORCID is an identifier for authors and includes bibliographic information. The following is ORCID information for the authors of this research: Mahmoud Shakouri (http://orcid.org/0000-0003-3755-5942), Chukwuma Nnaji (http://orcid.org/0000-0002-3725-4376), Saeed Banihashemi (http://orcid.org/0000-0002-7438-1235).

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